IN Brief:
- Ofgem has opened its review of the Capacity Market Advisory Group, with responses due by 2 October.
- The regulator is examining CMAG’s effectiveness, governance documents, stakeholder value, and future role.
- Any changes will affect how industry develops and scrutinises proposed amendments to Capacity Market Rules.
Ofgem has opened a review of the Capacity Market Advisory Group, asking industry whether the body remains effective, appropriately governed, and suited to future changes in the Capacity Market. The call for input was published on 18 August and remains open until 2 October 2026. Responses will inform the regulator’s assessment of CMAG and any subsequent changes to its objectives, governance arrangements, or operating model.
The review is structured around three areas: whether CMAG is meeting its objectives and providing value to stakeholders, whether its Terms of Reference and Operating Procedures remain appropriate, and how the group should develop to support future engagement and industry needs. Ofgem is seeking evidence from CMAG members, Capacity Market participants, previous rule-change proposers, administrative bodies, and other organisations involved in the mechanism.
CMAG was created to make the Capacity Market Rules change process more dynamic, adaptive, and transparent. Elexon acts as secretariat, while the group provides a forum in which proposals can be developed, challenged, and prioritised before they move through the formal regulatory process. That structure is intended to expose technical and implementation problems earlier, when a proposal can still be amended without forcing the regulator to resolve every issue at the final decision stage.
The need for that intermediate layer is largely practical. Capacity Market rules deal with detailed questions around participation, qualification, metering, testing, settlement, obligations, and administration, and a change aimed at one problem can have effects elsewhere in the framework. Allowing affected parties to examine a proposal collectively helps identify those interactions before they become embedded in a formal rule-change request.
CMAG does not replace Ofgem’s decision-making authority. The group develops and scrutinises proposals, but the regulator remains responsible for deciding whether a change should be made. Governance therefore determines how well the two functions fit together: an advisory body has to be open enough to capture useful industry expertise, but disciplined enough to avoid becoming an alternative decision forum with unclear accountability.
Terms of Reference and operating procedures are central to that balance. They define the group’s purpose, membership, meeting arrangements, and routes through which proposals are considered. If those mechanisms become too cumbersome, technical changes can stall before they reach Ofgem; if they are too loose, participants can lose confidence that competing proposals receive consistent scrutiny or that stakeholder influence is being exercised transparently.
The timing of the review is useful because CMAG has now accumulated several years of operating experience rather than existing mainly as a governance design. Its meetings began in 2022, giving the regulator and industry a record against which to judge whether the original objectives are being met. Ofgem is explicitly asking whether stakeholders consider the group valuable, moving the assessment beyond procedural compliance towards whether CMAG improves the quality and pace of Capacity Market rule development.
That question becomes more important as the electricity system changes around the mechanism. Capacity adequacy is increasingly supported by a mix of conventional generation, storage, demand-side response, interconnection, and other forms of flexible capacity, each with different technical and commercial characteristics. Rules covering qualification, metering, obligations, and settlement have to remain workable across that mix without allowing the change process itself to become a bottleneck.
There is an unavoidable tension between speed and scrutiny. A security-of-supply mechanism cannot be so static that operational problems wait years for correction, but rapid amendment without sufficient technical challenge can create implementation costs or unintended effects elsewhere in the market. CMAG exists largely to provide a structured middle ground, allowing proposals to mature through industry discussion before Ofgem makes a formal determination.
Ofgem is also testing whether the current engagement model reaches the right participants at the right stage. A technically sound rule-change process depends on expertise from parties that understand both the commercial obligations and the systems needed to implement them, so the review is an opportunity to examine whether CMAG’s current structure consistently brings those perspectives together before proposals are formalised.
The current call for input is therefore a review of the machinery used to produce future Capacity Market changes rather than a consultation on one substantive market rule. If Ofgem concludes that objectives, membership arrangements, governance documents, or engagement processes need adjustment, those revisions could affect how later technical proposals are developed and prioritised. Responses due by 2 October will give the regulator the evidence to decide whether CMAG remains fit for the next phase of Capacity Market governance.
